Dividend update: Comment on Dividend Cuts
Dividend is the backbone of our investment strategy. Providing a consistent return to shareholders urges companies to carefully manage their cashflows and balance sheet, and scrutinize their investment decisions. As the economy has come to an abrupt stop due to the COVID-19 crisis, regulators, companies and even investors are questioning whether it is prudent to return cash to shareholders when the outlook is filled with uncertainty. We agree, some companies will need all their available resources to weather the crisis. Many others however, are according to our opinion in good shape financially to see this through. Some companies are simply not impacted much directly.
We see the tradeoff between rewarding shareholders and continuity of the business, but arguments to stop paying dividends altogether for all companies are an overreaction in our opinion. Worries that the income stream from dividends will dry up completely can also be seen as not entirely necessary.
Comment on Dividend CutsDownload
This document is prepared by the fund managers of Kempen (Lux) European High Dividend Fund and Kempen (Lux) Global High Dividend Fund (‘the Funds’), managed by Kempen Capital Management N.V. The Funds currently hold shares in BMW, Ahold, BASF, easyJet, Orange, National Grid, ING and Nokia and do not hold shares in Nestle. The views expressed in this article may be subject to change at any given time, without prior notice. KCM has no obligation to update the contents of this article. As asset manager KCM may have investments, generally for the benefit of third parties, in financial instruments mentioned in this article and it may at any time decide to execute buy or sell transactions in these financial instruments. This article does not contain investment advice, no investment recommendation, no research, or an invitation to buy or sell any financial instruments, and should not be interpreted as such. This article is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. The views expressed herein are our current views as of the date appearing on this article. This article has been produced independently of the company and the views contained herein are entirely those of KCM.